80

with the fraud.79 The grantor cannot testify as to whether anything transpired between him and the grantee whereby he gave the latter to understand that the transaction was for an improper purpose, or whether the notes given in part consideration were made in good faith. Evidence of the grantee's good character, and of his reputation for honesty and fair dealing, is not admissible on the question of his intent or to rebut proof of fraud.82

§ 36. Knowledge of grantor's indebtedness or insolvency.— On an issue as to whether a conveyance or transfer of property was fraudulent as to creditors, evidence going to show the debtor's circumstances, and the grantee's connection with him and means of information about him, and tending to show that the grantee knew of the grantor's indebtedness or insolvency at the time of the conveyance, is admissible, as relevant to the question of the good faith of the grantee.83 As tending to show knowledge on the part of the grantee of the grantor's indebtedness or insolvency, evidence of the general reputation of the grantor as to pecuniary responsibility, of declarations of the grantee prior to the conveyance,85 of previous transfers from the grantor to the grantee during the existence of an alleged indebtedness to the grantee claimed to be the consideration for

84

79. Lesser v. Brown, 75 Conn. 491, 54 Atl. 205; Bender v. Kingman, 64 Neb. 766, 90 N. W. 886.

80. Blaut v. Gabler, 77 N. Y. 461, aff'g 8 Daly, 48.

81. Schmick v. Noel, 72 Tex. 1, 8 S. W. 83.

82. Simpson v. Westenberger, 28 Kan. 756, 42 Am. Rep. 195; Dawkins v. Gault, 5 Rich. (S. C.) 151.

83. Hallock v. Alvord, 61 Conn. 194, 23 Atl. 131; Robinson v. Woodmansee, 80 Ga. 249, 4 S. E. 497; O'Donnell v. Hall, 157 Mass. 463, 32 N. E. 666; Stadtler v. Wood, 24 Tex. 622.

the conveyance in controversy,86 is admissible. A letter written by the grantee, suggesting to the grantor to make false representations for the purpose of obtaining a fictitious credit, and offering to assist therein, is competent as tending to show knowledge of the grantor's insolvency.87 But evidence that proceedings in bankruptcy were instituted against both the debtor and the creditor but a few days after the execution of an assignment and bill of sale is not admissible to show that at the date of such assignment the creditor knew of the debtor's insolvency. Nor is evidence admissible as to what a mortgagee was told by his counsel in reference to his right to make a mortgage loan to the mortgagor. That a mortgagee loaned money and sold goods to his mortgagor, after the execution of the deed of mortgage, and took notes for the payment of his debt in semi-monthly installments, is evidence that he did not know his debtor to be in an insolvent condition."

89

88

837. Testimony of grantee as to his own knowledge or intent. Where a conveyance is alleged to be fraudulent towards creditors, the grantee may testify as to his good faith, purpose, and intention in taking the conveyance," and as to whether he

84. Hudson v. Bauer Grocery Co., 105 Ala. 200, 16 So. 693; Price v. Mazange, 31 Ala. 701; Sweetser v. Bates, 117 Mass. 466; Metcalf V. Munson, 92 Mass. 491; Whitcher v. Shattuck, 85 Mass. 319; Hahn v. Penney, 60 Minn. 487, 62 N. W. 1129; Goldberg v. McCracken (Tex. 1888), 8 S. W. 676; Hooks v. Pafford, 34 Tex. Civ. App. 516, 78 S. W. 991.

Testimony of a witness to his belief that it was generally known that the vendor was in debt is, however, not admissible against the vendee, since it does not prove fraud in the vendee. Scott v. Heilager, 14 Pa. St. 238.

85. Hunsinger v. Hoffer, 110 Ind.

390, 11 N. E. 463; Foster v. McAlester, 3 Ind. T. 307, 58 S. W. 679.

86. Trumbull v. Hewitt, 65 Conn. 60, 31 Atl. 492.

87. Clark v. Finn, 12 Mo. App. 583. 88. Ecker v. McAlister, 54 Md. 362. 89. Bicknell v. Mallett, 160 Mass. 328, 35 N. E. 1130.

90. Cole v. Albers, 1 Gill (Md.) 412.

91. N. Y.-Starin v. Kelly, 88 N. Y. 418, aff'g 47 N. Y. Super. Ct. 288; Bedell v. Chase, 34 N. Y. 386; Sperry v. Baldwin, 46 Hun, 120; Durfee v. Bump, 51 Hun, 637, 3 N. Y. Supp. 505.

Cal.-Byrne v. Reed, 75 Cal. 277, 17 Pac. 201.

92

had any knowledge of his grantor's fraudulent intent, subject to the exception that such testimony is not competent to vary the terms of the conveyance." A vendee may show by his agent who made the purchase, that his purpose in making it was to collect the vendee's demands against the vendor."4

§ 38. Participation in fraudulent intent.-The acts of the grantor in an alleged fraudulent conveyance and his declarations and admissions, made to a third person, in respect to such transaction, are not competent evidence to show the grantee's knowledge of the grantor's fraudulent intent or participation therein. Fraud, or knowledge of or participation in fraudulent designs or transactions, is provable by facts and circumstances, and as a general rule any lawful evidence, other than acts and declarations of the grantor, as to facts and circumstances which would tend to disclose the real purpose and intent of the grantee is admissible, and the exclusion of such evidence, when it tends

96

Colo.-Brown v. Potter, 13 Colo. App. 512, 58 Pac. 785.

Ind.-South Bend Iron Works Co. v. Duddleson (App. 1891), 27 N. E. 312; Wilson v. Clark, 1 Ind. App. 182, 27 N. E. 310.

Iowa. Frost V. Rosencrans, 66 Iowa, 405, 23 N. W. 895.

Kan.-Gentry v. Kelley, 49 Kan. 82, 30 Pac. 186.

Mass.-Snow v. Paine, 114 Mass.

Tex.-Hamburg v. Wood, 66 Tex. 168, 18 S. W. 623; Wright v. Solomon (Civ. App. 1898), 46 S. W. 58; Numsen v. Ellis, 3 Tex. App. Civ. Cas., § 134. Compare Hinds v. Keith. 57 Fed. 10, 6 C. C. A. 231, 13 U. S. App. 222.

92. Richolson v. Freeman, 56 Kan. 463, 43 Pac. 772; Lincoln v. Wilbur, 125 Mass. 249; Filley v. Register, 4 Minn. 391, 77 Am. Dec. 522.

93. Nixon v. McKinney, 105 N. C. 23, 11 S. E. 154.

94. Blankenship, etc., Co. v. Willis, 1 Tex. Civ. App. 657, 20 S. W. 952.

95. Bogert v. Hess, 50 App. Div. (N. Y.) 253, 63 N. Y. Supp. 977; Cuyler v. McCartney, 33 Barb. (N. Y.) 165; Guebert v. Zick, 31 Ill. App. 390. Compare Bredin v. Bredin, 3 Pa. St. 81.

96. N. Y.-McCabe v. Brayton, 38 N. Y. 196.

to establish fraud, is error." Books of account of the mortgagor which failed to show some of the alleged debts secured by an alleged fraudulent mortgage," letters written by the mortgagee or by a relative of the mortgagee," the latter being properly connected therewith, are admissible as tending to show participation and collusion. Declarations and admissions of the grantee or transferee tending to show his fraudulent knowledge or purpose in taking the conveyance or transfer are admissible against him.1

§ 39. Separate conveyances or transactions.-On an issue as to the fraudulent character of a conveyance, evidence of other and separate conveyances and transactions of the grantor of a similar fraudulent character, although admissible to establish the fraudulent intent of the grantor, without evidence to connect the grantee with such transactions,2 is inadmissible, as against the grantee, except where there is other evidence tending to show his knowledge of or connection with the same under circumstances indicative of fraudulent collusion between him and the debtor in a general fraudulent scheme, in which case it is competent on the question

Wash.-Adams V. Dempsey, 29 Wash. 155, 69 Pac. 738.

97. Craig v. Fowler, 59 Iowa, 200, 13 N. W. 116.

98. Cluett v. Rosenthal, 100 Mich. 193, 58 N. W. 1009, 43 Am. St. Rep. 446.

99. First Nat. Bank v. Marshall, 56 Kan. 441, 43 Pac. 774; Krolik v. Graham, 64 Mich. 226, 31 N. W. 307.

1. Bernard v. Guidry, 109 La. 451, 33 So. 558; Field v. Livermore, 17 Mo. 218; Altschuler v. Coburn, 38 Neb. 881, 57 N. W. 836.

2. See Other and separate fraudulent conveyances and transactions, chap. XVII, § 21, supra.

of the good faith of the grantee in the transaction in question.3 But it has been held that evidence that one who has taken property in payment of his debt had previously taken a chattel mortgage, alleged to be fraudulent on its face, on the property to secure his debt, and had made a sale thereunder, is irrelevant.* Evidence as to other property purchased from the grantor at the same time as the property in question is admissible in order to show fraud towards creditors in the latter transaction.5

§ 40. Good faith of purchaser from grantee.-Evidence tending to prove whether a purchaser from a fraudulent grantee had or had not notice that the first sale was fraudulent is relevant and admissible, subject to the general rules of evidence, to show his fraudulent intent or good faith in taking the conveyance. The fact that the purchaser had a lien on the property is admissible on the question of his good faith in taking the conveyance from the fraudulent grantee. Where the bona fides of the subsequent purchaser is in issue, statements of a witness regarding the financial condition of a former vendor are misleading and irrele vant. The testimony of the assignee of a mortgage that he knew

8

3. N. Y.-McCabe v. Brayton, 38 N. Y. 196; Ford v. Williams, 13 N. Y. 577, 67 Am. Dec. 83.

Ala.-Reed v. Smith, 14 Ala. 380. Ill. Schroeder v. Walsh, 120 Ill. 403, 11 N. E. 70.

Iowa.-Doxsee V. Waddick, 122 Iowa, 599, 98 N. W. 483; Craig v. Fowler, 59 Iowa, 200, 1 N. W. 1.16.

Me.-Grant v. Libby, 71 Me. 427; Glake v. Howard, 11 Me. 202.

Mich.-Wessels v. Beeman, 87 Mich. 481, 49 N. W. 483; Burrill v. Kimball, 65 Mich. 217, 31 N. W. 842. Mo.-Lane v. Kingsberry, 11 Mo.

402.

N. H.—Whittier v. Varney, 10 N. H. 291.

Pa.-Miller v. McAlister, 178 Pa. St. 140, 35 Atl. 594; Kline v. First Nat. Bank (1888), 15 Atl. 433; Welsh v. Cooper, 3 Am. L. J. (N. S.) 30.

Tex.-Cook v. Greenberg (Civ. App. 1896), 34 S. W. 687; Fant v. Willis (Civ. App. 1893), 23 S. W. 99.

4. Ragland v. McFall, 137 Ill. 81, 27 N. E. 75, aff'g 36 Ill. App. 135. 5. Lillie v. McMillan, 52 Iowa, 463, 3 N. W. 601.

6. Hodges v. Coleman, 76 Ala. 103; Rice v. Bancroft, 28 Mass. 469; Kichline v. Labach, 125 Pa. St. 295, 17 Atl. 432.

7. Park v. Snyder, 78 Ga. 571, 3 S. E. 557.

8. Rindskopf v. Myers, 71 Wis. 639, 38 N. W. 185.